Canonical Definitions

A distinct billing entity with one or more subscriptions. The "who" of your business relationship.

A billable agreement between a customer and your product, with defined terms, pricing, and status. The "what and when" of the relationship.

A specific capability, quantity, or configuration granted by a subscription. The "how much" of the relationship.

1. **Customers own subscriptions, not the reverse.** A customer churns when *all* their subscriptions end.

The total predictable revenue from active subscriptions, normalized to a monthly value.

MRR × 12. The annualized value of recurring revenue.

MRR added from newly acquired customers in the period.

Additional MRR from existing customers (upgrades, add-ons, seat increases).

MRR lost from customers who cancelled.

MRR reduction from existing customers who downgraded (but didn't churn).

MRR from existing customers that renewed unchanged — no expansion, contraction, or churn.

The net change in MRR after all movements.

Recognized revenue according to ASC 606 accounting standards.

Total contract value signed in a period.

The annualized value of a contract, normalizing multi-year deals to a single year. When aggregated, represents average deal size on an annual basis.

Average monthly recurring revenue per customer account.

Percentage of revenue retained from existing customers over a period, including expansion, contraction, and churn. Two methods are widely used: cohort method (preferred) and formula method. Recommended: trailing 12 months, annualized if using shorter periods.

Percentage of revenue retained from existing customers, excluding expansion. Cannot exceed 100%. Two methods are widely used: cohort method (preferred) and formula method.

Percentage of customers lost in a period.

Percentage of MRR lost to churn and contraction in a period. Gross (losses only, not netted against expansion).

Percentage of contracts renewed at term.

Total cost to acquire a new customer.

Marketing-only portion of CAC (excludes sales costs).

Total profit expected from a customer over their lifetime. Calculated with gross margin.

Ratio of customer lifetime value to acquisition cost.

Time required to recover customer acquisition cost.

Revenue minus cost of goods sold, as percentage of revenue.

ARR Growth Rate (YoY %) + EBITDA Margin (%).

Sales efficiency metric: QoQ ARR growth divided by prior quarter S&M spend.

Capital efficiency metric: Net burn divided by net new ARR. Popularized by David Sacks.

An entity (company/account) with a paid subscription.

A customer in good standing at a point in time.

An individual person using the product within a customer account.

A user who performed a qualifying action in the defined period.

A contact who has expressed interest (form fill, signup, etc.).

A lead meeting criteria indicating sales-readiness.

An MQL accepted by sales as worth pursuing.

A qualified sales prospect in the pipeline.

% Promoters (9-10 rating) minus % Detractors (0-6 rating).

Percentage of positive ratings on satisfaction survey.

Average rating on ease of experience (typically 1-7 scale).

Composite score predicting likelihood of retention or churn.

A defined time interval for measurement. Always specify:

A group of customers/users defined by a shared characteristic, typically signup date.

A period ending at the current date.

Comparison to same period in prior year.

Comparison to prior month.

Comparison to prior quarter.

Direct costs to deliver the product/service.

Costs of running the business (excluding COGS).

Earnings before interest, taxes, depreciation, and amortization.

Net cash consumed per month.

Months until cash runs out at current burn rate.

Average days to collect payment after invoicing.

Percentage of revenue written off as uncollectable.

Percentage of time service is operational.

Contractual commitment for service levels (uptime, response time, etc.).

An unplanned interruption or degradation of service.

Average time from incident start to resolution.

Percentage of requests resulting in errors.

Total value of active sales opportunities.

Ratio of pipeline value to quota.

Percentage of opportunities closed as won.

Time from opportunity creation to close.

A period of continuous user activity in the product.

Daily / Weekly / Monthly Active Users.

DAU/MAU ratio - how often users return.

Percentage of users using a specific feature.

Moment when new user experiences core product value.

Time from signup to achieving first meaningful value.

Time from ticket/request to first human response.

Time from request to final resolution.

Time from code commit to production deployment.

- **Point-in-time:** Value at a specific moment (e.g., "Customers as of Dec 31")

- **Beginning of period:** Value at start (for retention calculations)

- **Unique:** Deduplicated count (e.g., unique users)

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